From the course: Human Resources: Compensation and Benefits
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Job-based pay
From the course: Human Resources: Compensation and Benefits
Job-based pay
- How does an organization decide what they will pay for different jobs and how to go about valuing the work? I'm going to explain how various techniques are used to determine the relative worth of jobs. One approach often used with executive level jobs is simply to base each job's pay on what competitors offer for the same work. This is called direct market pricing. Another approach very common in small organizations with fewer than about 10 different jobs, is simply to rank order the jobs in terms of their relative worth to the firm. In a law firm, for example, the highest ranking job might be equity partner, followed by non-equity partner, senior associate, associate, junior associate, paralegal, and finally, the administrative staff. A third approach, the point method of job evaluation is the most commonly used method in the United States and Europe. A key assumption of the point method is that each job has a particular value to a firm regardless of who occupies that job. For…
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